A one-off Energy Assistance Payment for recipients of income support

Transcription

1 BUDGET WRAP-UP 2019

2 Overview The Budget has been delivered in April 2019, a month earlier than usual, and is expected to be shortly followed by the proroguing of the Parliament for the 2019 election. In this context, it can be seen as an unoicial start of the Coalition s election campaign. The foundation of the Budget is the Treasurer s announcement that the budget will return to surplus in , with a projected surplus of $7.1 billion (0.4 per cent of a total federal budget of around $500 billion). The surplus benefits from a substantial increase in revenue from company tax, based on strong commodity prices, which has more than oset a softer outlook for household consumption, dwelling investment and average wages. As widely anticipated, the Treasurer has announced an accelerated program of tax cuts, building on the low and middle income tax relief announced in the Budget. An increase to the Low and Middle Income Tax Oset will be available for most taxpayers for , provided the Government can secure passage of the required legislation through the Parliament. Proposed major reform of income tax rates and thresholds would see most Australians facing a marginal tax rate of 30 per cent from 1 July The Government has also announced an extension of its infrastructure investment program, with major projects including high speed rail between Geelong and Melbourne and additional funding for urban congestion and strategic road projects. The budget contains few new savings measures, with the vast majority of new savings coming from a more eicient administration of income support payments using Single Touch Payroll data. Some other major announcements in the Budget include: A one-o Energy Assistance Payment for recipients of income support f f An increase to the value and eligibility for the instant asset write o for small and medium sized business up to $50M turnover Changes to voluntary superannuation contribution rules for people aged 65 and over. f f Significant funding to implement the Government s response to the Financial Services Royal Commission. First published 2 April Financial Planning Association of Australia

3 Personal Income Tax The Government will lower taxes for individuals by building on its Personal Income Tax Plan, which was announced in the Budget. LOW AND MIDDLE INCOME TAX OFFSET The Government will extend the Low and Middle Income Tax Oset (LMITO) by increasing the base amount from $200 to $255 per year and the maximum amount from $530 to $1,080 per year. Taxpayers with income between $48,000 and $90,000 will be eligible to recieve the maximum oset of $1,080. The oset phases out with incomes up to $126,000. The new amounts will apply for the financial year which means, provided the Government can legislate these changes in the three Parliamentary sitting days in April, the oset will apply to tax returns lodged from 1 July The LMITO is due to end on 30 June LOWER TAXES FOR LOW AND MIDDLE INCOME EARNERS From 1 July 2022, the Government will extend the threshold for the 19 per cent tax rate from $41,000 to $45,000. The Government will also increase the Low Income Tax Oset from $645 to $700 per year. Taken together, these changes make up for the removal of the LMITO on 30 June FURTHER STRUCTURAL CHANGES TO THE TAX SYSTEM TO DELIVER LOWER TAXES From 1 July 2024, the Government will reduce the 32.5 per cent tax rate to 30 per cent, abolish the 37 per cent tax rate and increase the threshold for the 30 per cent tax rate to $200,000. Treasury estimates these changes will result in 94 per cent of Australian taxpayers facing a marginal tax rate of 30 per cent, which will apply to incomes between $45,001 and $200,000. INCREASING MEDICARE LEVY FOR LOW-INCOME THRESHOLDS The Government will increase the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from the income year. New thresholds will account for recent movements in the CPI. The threshold for singles will be increased from $21,980 to $22,398. The family threshold will be increased from $37,089 to $37,794. For single seniors and pensioners, the threshold will be increased from $34,758 to $35,418. The family threshold for seniors and pensioners will be increased from $48,385 to $49,304. f f For each dependent child or student, the family income thresholds increase by a further $3,471, instead of the previous amount of $3,406. FPA Budget Wrap-up

4 NEW PERSONAL TAX RATES AND THRESHOLDS INCOME RANGE ($) Rate (%) Current tax thresholds from 1 July 2018 New tax thresholds from 1 July 2018 New tax thresholds from 1 July 2022 Tax free 0-18, , , ,201-37,000 18,201-37,000 18,201-45, ,001-90,000 37,001-90,000 45, , , ,000 90, , , , , , ,000+ Low and middle income tax oset Up to $530 Up to $1,080 - Low Income Tax Oset (LTO) Up to $445 Up to $445 Up to $700 Rate (%) New tax thresholds from 1 July 2024 ($) Tax free 0-18, ,201-45, , , , FPA Budget Wrap-up 2019

5 PROPOSED TAXABLE INCOME TABLE FROM 1 JULY 2022 Tax thresholds from 1 July 2022 ($) Taxable income 0-18,200 Nil 18,201-45,000 Nil + 19% of each dollar over $18,200 45, ,000 $5, % of each dollar over $45, , ,000 $29, % of each dollar over $120, ,000+ $51, % of each dollar over $180,000 LITO Up to $700 Changes include: Increase top threshold of the 19% tax bracket from $37,000 to $41,000 Increase top threshold of the 32.5% tax bracket from $90,000 to $120,000 PROPOSED TAXABLE INCOME TABLE FROM 1 JULY 2024 Tax thresholds from 1 July 2024 ($) Taxable income 0-18,200 Nil 18,201-45,000 Nil + 19% of each dollar over $18,200 45, ,000 $5, % of each dollar over $45, ,000+ $51, % of each dollar over $200,000 Simpler system over the medium-term. Abolishing the 37 percent tax bracket and maintaining the highest marginal tax rate at a similar multiple of average earnings Changes include: Reduce tax rate from 32.5% to 30% Increase top threshold of the 30% tax bracket from $120,000 to $200,000 Removal of the 37% tax bracket FPA Budget Wrap-up

6 Tax INSTANT ASSET TAX WRITE-OFF The Government will increase the instant asset tax write-o from $25,000 to $30,000 and making this available for medium sized businesses (those with an aggregated annual turnover of between $10 million and $50 million) as well as small businesses. The increased threshold and eligibility apply from the release of the budget at 7:30pm on 2 April The write-o will operate until 30 June Small businesses will also continue to have access to the simplified depreciation rules. TAX INTEGRITY INCREASING ENGAGEMENT AND ON-TIME PAYMENT OF TAX AND SUPERANNUATION LIABILITIES The Government will provide $42.1 million over four years to the ATO to increase activities to recover unpaid tax and superannuation liabilities. These activities will focus on larger businesses and high wealth individuals to ensure on-time payment of their tax and superannuation liabilities. The measure will not extend to small businesses. 6 FPA Budget Wrap-up 2019

7 Superannuation IMPROVING FLEXIBILITY FOR OLDER AUSTRALIANS The Government will allow voluntary superannuation contributions (both concessional and nonconcessional) to be made by those aged 65 and 66 without meeting the work test from 1 July People aged 65 and 66 will also be able to make up to three years of non-concessional contributions under the bring forward rule. Those up to and including age 74 will be able to receive spouse contributions, with those 65 and 66 no longer needing to meet the work test. PROTECTING YOUR SUPER PACKAGE - AMENDMENT The Government has also agreed to amendments to the Protecting Your Super Package to: f f extend to 16 months the period after which an account that has not received any contribution is considered inactive; f f expand the definition of when an account is considered active for the ATO-led consolidation regime; and require the ATO to consolidate to an active account, where possible, within 28 days of receipt. PROTECTING YOUR SUPER PACKAGE PUTTING MEMBERS INTERESTS FIRST The Government will delay the start date for ensuring insurance within superannuation is only oered on an opt-in basis for amounts with balance of less than $6,000 and new accounts belonging to members under the age of 25 years to 1 October These changes (currently before Parliament) will protect the retirement savings of young people and those with low balances by ensuring their superannuation is not unnecessarily eroded by premiums on insurance policies they do not need or are not aware of. The changes will also reduce the incidence of duplicated cover so that individuals are not paying for multiple insurance policies, which they may not be able to claim on. These changes will not prevent anyone who wants insurance from being able to obtain it low balance and young members will still be able to opt-in to insurance cover within superannuation. PERMANENT TAX RELIEF FOR MERGING SUPERANNUATION FUNDS The Government will make permanent the current tax relief for merging superannuation funds that is due to expire on 1 July The current tax relief allows the transfer of revenue and capital losses to a new merged fund, and to defer taxation consequences on gains and losses from revenue and capital assets. FPA Budget Wrap-up

8 REDUCING RED TAPE FOR SUPERANNUATION FUNDS The Government will reduce costs and simplify reporting for superannuation funds by streamlining some administrative requirements for the calculation of exempt current pension income (ECPI). SUPERSTREAM ROLLOVER STANDARD The Government will provide $19.3 million over three years from (including $12.6 million in capital funding in ) to the ATO to send electronic requests to superannuation funds for the release of money required under a number of superannuation arrangements. This change, which will take eect from 31 March 2021, will be implemented by expanding the electronic SuperStream Rollover Standard used for the transfer of information and money between employers, superannuation funds and the ATO. The start date of Self-Managed Superannuation Funds rollovers in SuperStream will be delayed until 31 March 2021 to coincide with the expansion of the SuperStream Rollover Standard. SUPERANNUATION CONSUMER ADVOCATE The Government will provide $0.1 million in to undertake an expression of interest process to identify options to support the establishment of a Superannuation Consumer Advocate. The Advocate would provide input on behalf of consumers in policy discussions and provide information to educate and assist consumers navigate the superannuation system. 8 FPA Budget Wrap-up 2019

9 Social Security ENERGY ASSISTANCE PAYMENT The Government will provide a one-o payment of $75 for singles and $62.50 for each member of an eligible couple ($125/couple) who receive a qualifying payment on 2 April 2019 to provide relief from high energy costs. Qualifying payments include the Age Pension, Carer Payment, Disability Support Pension, Parenting Payment Single, and Veterans pensions and payments. CHANGING THE SOCIAL SECURITY INCOME ASSESSMENT MODEL The Government will achieve savings of $2.1 billion by simplifying and automating the reporting of employment income for social security purposes through Single Touch Payroll (STP). This measure will greatly reduce the likelihood of income support recipients receiving an overpayment. Income data received through STP will be shared with the Department of Human Services. The eiciencies from this measure will be derived through more accurate reporting of incomes. This measure will not change eligibility criteria or maximum payment rates. EXTENDING FAMILY TAX BENEFIT TO ABSTUDY RECIPIENTS AGED 16 AND OVER WHO STUDY AWAY FROM HOME The Government will provide $36.4 million over five years from to extend Family Tax Benefit eligibility to the families of ABSTUDY (secondary) student recipients who are aged 16 years and over, and are required to live away from home to attend school. This will improve access to secondary education for Indigenous Australians and help reduce the gap in outcomes between Indigenous and non-indigenous Australians in high school completion. FPA Budget Wrap-up

10 Aged Care ACCESS TO AGED CARE The Government will provide $320.0 million for a one-o increase to the basic subsidy for residential aged care recipients. $35.7 million will be provided to increase to the dementia and the veterans home care supplements to support home care recipients who require additional care to stay in their homes longer. The Government will provide $4.6 million to trial a residential care needs assessment funding tool as an alternative to the existing Aged Care Funding Instrument $7.1 million will be provided over two years to improve payment administration arrangements for home care packages to align home care arrangements with other Government programs, such as the National Disability Insurance Scheme. HOME CARE PACKAGES The Government s Home Care Packages Program supports Australians who choose to receive care in their own homes. The Government is providing $282.4 million over five years from for an additional 10,000 home care packages across all levels. Australians with dementia or requiring cognition support will benefit from additional funding for home care supplements, and the Government is providing $7.7 million to develop an end-to-end compliance framework for home care. COMMONWEALTH HOME SUPPORT PROGRAMME The Government will provide $5.9 billion over two years from to extend the Commonwealth Home Support Programme (CHSP) funding arrangements. The CHSP contributes to essential home support services, such as meals (Meals on Wheels), personal care, nursing, domestic assistance, home maintenance, and community transport, to assist older people to keep living independently in their own home. ELDER ABUSE The Government has announced a National Plan to Respond to the Abuse of Older Australians. The Plan includes $18 million to create a new National Hotline (1800 ELDERHelp or ) and conduct trials of frontline services for victims of abuse. The Government is also contributing $1.5 million towards developing a Serious Incident Response Scheme. The Government is establishing the independent Aged Care Quality and Safety Commission from 1 January RESIDENTIAL CARE SAFETY AND QUALITY An additional 13,500 residential care places will be available, combined with a $60 million investment in infrastructure. The Government is providing a $320 million general subsidy for residential aged care and $8.4 million will be provided to introduce mandatory reporting against several national residential care quality indicators. 10 FPA Budget Wrap-up 2019

11 Regulators ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY The Government will provide $606.7 million to relevant government departments and agencies to support the response to the Royal Commission recommendations. Part of this funding is recovered from ASIC s industry funding model. Funding includes: f f f f f f f f f f f f $404.8 million to ASIC to expand its capability and implement its new enforcement strategy $145 million to strengthen APRA s supervisory and enforcement activities $7.7 million to establish an independent financial regulator oversight authority $1 million for APRA s capability review $11.2 million to fund Treasury s Royal Commission Implementation Taskforce $2.6 million towards designing and implementing a compensation scheme of last resort f f $2.8 million to AFCA to extend its jurisdiction to historical claims to 1 January 2008 f f $30.7 million to pay compensation owed to consumers and small businesses from legacy unpaid EDR determinations. AUSTRALIAN TAXATION OFFICE The Government will provide $1.0 billion to the ATO to extend the operation of the Tax Avoidance Taskforce to crack down on large corporations, multinationals and high wealth individuals. This measure will allow the Taskforce to expand these activities, including increasing its scrutiny of specialist tax advisors and intermediaries that promote tax avoidance schemes and strategies. FEDERAL COURT The Government will provide $43.9 million to fund additional judges for the Federal Court of Australia. This additional resourcing will allow for the expansion of federal court responsibilities for corporate crime, which was recommended by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. FPA Budget Wrap-up

12 ABN GPO Box 4285 Sydney NSW 2001 p e. First published 2 April Financial Planning Association of Australia